A debt consolidation loan can turn several balances into one fixed payment, but a smaller monthly bill does not automatically mean the switch saves money. The new loan still needs to beat the cost of the debts it replaces.
This calculator prices the proposed consolidation loan. It does not calculate what your current cards or store accounts will cost if you leave them alone.
Use the result as one side of a before-and-after comparison. Check the new payment, total interest, payoff date, fees, and the balances you plan to clear.
This Calculator Prices the New Loan Only
The calculator uses the total debt, rate, and term you enter to estimate the payment, total interest, total paid, and payoff date. It does not calculate the remaining cost of your current debts.
That distinction matters when the new payment is lower. The payment can fall because the rate is lower, because the term is longer, or because both changed.
Build the Before-and-After Comparison
Start with every balance you plan to pay off. Record each balance, interest rate, and current payment so you know what the new loan is replacing.
One useful benchmark is the weighted average interest rate. A weighted average gives larger balances more influence than smaller balances.
How a Weighted Average Rate Works
Suppose you want to consolidate these three balances:
| Debt | Balance | Interest rate |
|---|---|---|
| Credit card A | $6,000 | 24% |
| Credit card B | $8,000 | 18% |
| Store account | $4,000 | 29% |
| Total | $18,000 | 22.44% weighted average |
Multiply each balance by its rate, add those results, then divide by the $18,000 total balance. The weighted average rate is about 22.44%.
That rate is a useful benchmark, not a forecast of your remaining interest. Payment amounts, changing balances, fees, and payment timing affect the actual payoff cost.
A Lower Rate Can Still Cost More With a Longer Term
A lower interest rate can help, but the term still matters. More months can reduce the payment while giving interest more time to build.
Consider an $18,000 consolidation loan at an illustrative 12% rate:
| Loan term | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 36 months | $597.86 | $3,522.87 | $21,522.87 |
| 60 months | $400.40 | $6,024.00 | $24,024.00 |
| 84 months | $317.75 | $8,690.93 | $26,690.93 |
The 12% rate is only an example and is not a current market rate. The table holds the balance and rate constant so you can isolate the term.
A change from 36 months to 84 months lowers the payment by about $280. Total interest rises by about $5,168.
A lower payment therefore cannot prove that consolidation saves money. Compare the new total cost with a reasonable estimate of your current debts.
Decide What Savings Means
Monthly payment savings compares what you pay now with the new required payment. Interest savings compares estimated remaining interest with interest on the new loan.
Payoff-time savings compares the current estimated payoff period with the new loan term. This calculator gives you the new-loan side of those comparisons, not the current-debt side.
Make Sure the Loan Can Clear Every Balance
The total debt field should reflect the balances you plan to pay off. An origination fee can create a shortfall when the lender deducts it before sending the proceeds.
An origination fee is a charge a lender may collect for making the loan. The calculator does not include that fee.
Suppose you need exactly $18,000 and a hypothetical lender deducts a 5% fee. An $18,000 loan would send you only $17,100.
You would need to borrow about $18,947.37 to receive $18,000 after that hypothetical deduction. The 5% fee is only an example, not a typical lender charge.
Credit Changes the Starting Rate
The calculator uses your selected credit score range to set a starting rate. A credit score is a number lenders may use when assessing lending risk.
Replace the starting rate with the quoted interest rate once you have an offer. A lower quoted rate can still lose its advantage when the new term is much longer or fees are high.
Extra Payments Can Keep the Loan Shorter
The calculator lets you add an optional extra monthly payment. It assumes the extra amount reduces principal, which is the unpaid loan balance.
The $18,000 example at 12% for 60 months has a scheduled payment of $400.40. Add $100 each month and the displayed amount becomes $500.40.
The loan would be paid off during month 45 instead of month 60. Total interest would fall from about $6,024 to about $4,421, which saves roughly $1,603.
Check the lender’s payment rules before relying on that result. Confirm that extra payments reduce principal without a prepayment penalty.
Consolidation Moves Debt Instead of Erasing It
A consolidation loan pays off selected balances and replaces them with a new debt. The total debt does not disappear because several account balances fall to zero.
The calculator assumes you stop adding new charges after the old balances are cleared. New card balances can leave you with the consolidation loan plus new revolving debt.
What the Calculator Assumes
The calculator assumes the new loan clears the entered balances in full on day one. Payments are fixed under the entered rate and term.
Origination fees are not included. The calculator also does not model the payments, interest, or payoff dates of the debts you have today.
Debt Consolidation Calculator Mistakes to Avoid
The most common errors come from comparing only one part of the before-and-after picture. Check the current debts and the proposed loan before you decide.
Monthly Payment Alone
A smaller payment can come from a longer term. Compare total interest and payoff time before you treat the monthly difference as savings.
A Simple Average for Current Rates
A simple average gives a small balance the same influence as a large balance. Use a weighted average when you want one rate for a rough comparison.
An Ignored Origination Fee
A deducted fee can leave you without enough cash to clear every listed debt. Check the net proceeds as well as the approved loan amount.
New Card Balances After Consolidation
The loan does not prevent new card balances. Consolidation can leave you worse off if the old accounts are cleared and then used heavily again.
Compare the Whole Before-and-After Picture
A consolidation loan should be judged against the debts it replaces, not by its payment alone. Compare the rate, term, total cost, payoff date, and net proceeds.
Use this calculator to price the proposed loan. Use your current statements and account details to build the other side of the comparison.
The strongest result fits the monthly budget and improves the broader payoff picture. A lower payment by itself is not enough.
Frequently Asked Questions
These questions cover parts of a debt consolidation estimate that the new-loan payment alone cannot answer. Your current balances and lender offer provide the other half of the comparison.
Does this calculator tell me how much debt consolidation will save?
No. It calculates the proposed consolidation loan but does not model what your current debts would cost if you kept them.
Should I compare the new rate with my highest credit card rate?
Not by itself. A weighted average rate can provide a better single-rate benchmark when you are replacing several balances with different rates.
What if the consolidation loan has a lower payment but a longer term?
The payment can fall while total interest rises. Compare the new total interest and payoff date before deciding whether the longer term helps.
Do I enter my balances or my current monthly payments?
Enter the total balances you plan to clear in the debt field. Keep your current payments separately so you can compare them with the new payment.
Does the calculator include an origination fee?
No. A deducted origination fee can reduce the cash you receive even though you repay the full approved loan amount.
Can extra payments make a consolidation loan cheaper?
Yes, when they reduce principal. Extra principal can shorten the payoff period and reduce total interest.
Does debt consolidation reduce how much I owe?
Not by itself. It replaces selected balances with a new loan, so the debt has moved rather than disappeared.